FTSE 100 pensions deficit amounts to £66bn

The total deficit in the pension schemes of the FTSE 100 is estimated to be £66 billion, according to the latest analysis from Pension Capital Strategies (PCS).

The FTSE 100 and Their Pension Disclosures report found that this year’s position shows a marked improvement from 2009, with an £8 billion decrease in the deficit.

The total deficit funding over the past 12 months amounted to £12.1 billion, an increase of almost 200% from the previous year’s £4.1 billion.

However, there has been a £1 billion reduction in provision of ongoing defined benefit (DB) pension provision, a fall of 15% in 12 months.

A total of 59 FTSE 100 companies reported significant funding contributions in their latest annual report and accounts, with Royal Dutch Shell making the biggest deficit contribution of £2.7 billion.

Ten companies have total disclosed pension liabilities greater than their equity market value, and British Airways, BT and Invensys have total disclosed pension liabilities that are more than double their equity market value.

The analysis also found that the total disclosed pension liabilities of the FTSE 100 have risen in the last 12 months from £376 billion to £437 billion.

Of the 14 firms that have disclosed pension liabilities of more than £10 billion, the largest is BT with £43 billion.

Charles Cowling, managing director, PCS, said: “Though it is pleasing to see an improvement in funding, this appears to be partly at the expense of ongoing provision, as more companies are looking to close their DB schemes to all members.

“Whilst the proposed change to CPI based pension increases from RPI based pension increases will help many companies, it is clear that there is still a long way to go in tackling pension liability and deficit issues in the FTSE 100.”